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(An item published at 1657 BST misstated that the Paris and Frankfurt markets were trading Friday. The correct version follows.)
LONDON (Alliance News) - The FTSE 100 ended higher Friday, tracking gains in US indices, with Lloyds Banking Group by far the best performer in London's blue-chip index after it signaled that it's recovery from the crippling effects of the financial crisis is accelerating.
The pound, meanwhile, fell against other major currencies after the UK Markit manufacturing Purchasing Managers' Index came in well short of economists' expectations.
The FTSE 100 ended up 0.4% on the day at 6,985.95, although it was down 1.2% for the week as a whole after big declines on Tuesday and Wednesday. The FTSE 250 closed flat Friday at 17,468.27, while the AIM All-Share index closed flat at 753.02.
The London indices had opened lower, tracking heavy losses on Wall Street in the previous session, but they started to recover after some positive consumer credit data and then moved higher when the US indices opened higher on Friday. When the London markets closed, the DJIA, S&P 500 and Nasdaq Composite were all up 0.7%.
Sentiment on Wall Street lifted after US consumer sentiment data showed a modest improvement in April, while the US manufacturing sector continued to expand. The Institute for Supply Management on Friday said its purchasing managers index came in at 51.5 in April, unchanged from the reading reported for the previous month.
The Bank of England, meanwhile said individuals borrowed GBP1.24 billion in March, much higher than February's upwardly revised figure of GBP785 million. Economists had expected consumer credit to edge higher to GBP800 million from the original February reading of GBP740 million.
The pound fell sharply against other major currencies, slumping to a low of USD1.5132 from a high of USD1.5397. Sterling also fell to its lowest level against the euro since mid-February, hitting a low of EUR1.3512.
Manufacturing output in the UK rose at its slowest pace since November according to Markit and the Chartered Institute of Procurement and Supply, creating a gloomier picture on the health of the UK economy less than a week before the General Election. The PMI reading for April was 51.9, down from the revised figure of 54.0 in March. Economists had expected the PMI to move up to 54.6 from the original March reading of 54.4.
"A key challenge for the next government is to revive manufacturing and help it at least regain its pre-crisis peak, as any signs of rebalancing the economy towards manufacturing and exports remain frustratingly elusive," says Rob Dobson, senior economist at Markit.
Lloyds ended as the best performer in the FTSE 100, up 5.9%, after it lifted its guidance for 2015 after reporting a strong underlying performance in the first quarter and confirming continued dividend payouts.
Its pretax profit for the first quarter dropped to GBP1.21 billion from GBP1.80 billion as it booked a GBP660 million charge related to the disposal of a stake in TSB Banking Group, but excluding this and other provisions, profit rose to GBP2.18 billion from GBP1.80 billion.
As was the case in the first quarter of 2014, Lloyds did not increase its provision for the mis-selling of payment protection insurance.
The bank improved its guidance for net interest margin in 2015 and said it expects a key measure of the quality of the loans it makes to customers will improve by more than previously expected. The bank's net interest margin, based on underlying figures, increased to 2.65% from the 2.32% recorded at the end of March 2014 and from 2.47% at the end of December that year. Lloyds had previously guided a full-year net interest margin of 2.55% and now expects to exceed that level.
Mining stocks were also amongst the best-performing stocks, after the manufacturing sector in China continued to barely expand in April, with a manufacturing PMI score of 50.1. That beat expectations for 50.0, and was unchanged from the March reading.
Anglo American, up 5.2%, Rio Tinto, up 3.9%, BHP Billiton, up 3.6%, Antofagasta, up 1.7%, and Glencore, up 0.8%, were amongst the best performers in the blue-chip index. In the FTSE 250, Vedanta Resources ended up 4.5%, while Centamin and Acacia Mining closed up 2.2% and 1.5%, respectively.
Motor insurers Admiral Group and Esure Group ended higher following upgrades from Barclays. Admiral was amongst the biggest gainers in the FTSE 100, up 0.9% at 1,572.42 pence after the bank upgraded it to Equal Weight from Under Weight, lifting its price target to 1,523 pence from 1,090p. Similarly, Esure was the third best mid-cap performer, up 4.0% at 227.00p, after being upgraded to Over Weight from Under Weight.
Rentokil Initial ended up 1.7%, after the provider of pest control, hygiene services and workwear said revenue in the quarter to the end of March rose 1.4% on the year to GBP417.8 million, as solid performances in most of its regional operations offsett continued weakness in parts of Europe.
Virgin Money Holdings closed up 1.3% as the lender said that profitability improved in the first quarter as mortgage lending increased. It grew its gross mortgage lending and said it received a "high number" of applications in the three months.
The London Stock Exchange will be closed on Monday due to a bank holiday, but the rest of the main equity markets will open, with the exception of Japan, which will be closed until Thursday.
In the economic calendar Tuesday, eurozone producer prices are due at 1000 BST and the US Markit services PMI is due at 1445 BST.
In the corporate calendar Tuesday, HSBC Holdings issues a first quarter interim management statement, while Aberdeen Asset Management provides half-year results. Glencore issues a first quarter production report and Greene King issues a trading statement.
By Daniel Ruiz; danielruiz@alliancenews.com
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